MARKET DEVELOPMENT
Govt. to Cut Export Tax on Palm Kernel Shell by 70%
Govt. to Cut Export Tax on Palm Kernel Shell by 70%
27/01/2016 (Jakarta Globe) - Government sources have announced plans to cut the export tax on palm kernel shells for the next two years, responding to palm oil producers demand for quick cash amid a global decline in prices, putting plans for power plant development using the biomass on the back burner.
Under the plan, the export tax will be cut from $10 a ton this year to $3, Industry Minister Saleh Husin told reporters. The tariff would increase to $5 next year and return to its original level in 2018.
Palm kernel shells are the solid leftover after palm fruits are milled for oil. The shell contains a high calorific value and is ideal for producing stem to turn turbine and electricity generators at common power plants.
Palm oil producers believe exporting the kernel shell could alleviate pressures from the weakened global palm oil price, which has declined 17 percent in the last 12 months.
"They demanded [a tax cut]," National Development Planning Agency Minister Sofyan A. Djalil said.
The government agreed to the tax cut, but also imposed a gradual increase to encourage local businesses to continue development of biomass-fired power plants, Sofyan said.
Indonesia is the world's largest palm oil producer and is awash with kern shells that, Sofyan said, could help the country reach its commitment of tapping 23 percent of overall energy consumption from renewable sources by 2025.
Today, the country gets only 8 percent of its total energy consumption from renewable sources. Indonesia burns oil to fulfil 44 percent of energy needs, with coal and gas making up the remaining 30 and 18 percent, respectively.
Under the plan, the export tax will be cut from $10 a ton this year to $3, Industry Minister Saleh Husin told reporters. The tariff would increase to $5 next year and return to its original level in 2018.
Palm kernel shells are the solid leftover after palm fruits are milled for oil. The shell contains a high calorific value and is ideal for producing stem to turn turbine and electricity generators at common power plants.
Palm oil producers believe exporting the kernel shell could alleviate pressures from the weakened global palm oil price, which has declined 17 percent in the last 12 months.
"They demanded [a tax cut]," National Development Planning Agency Minister Sofyan A. Djalil said.
The government agreed to the tax cut, but also imposed a gradual increase to encourage local businesses to continue development of biomass-fired power plants, Sofyan said.
Indonesia is the world's largest palm oil producer and is awash with kern shells that, Sofyan said, could help the country reach its commitment of tapping 23 percent of overall energy consumption from renewable sources by 2025.
Today, the country gets only 8 percent of its total energy consumption from renewable sources. Indonesia burns oil to fulfil 44 percent of energy needs, with coal and gas making up the remaining 30 and 18 percent, respectively.